RBI fines 36 banks over SWIFT updates

PNB had not linked the SWIFT messaging terminal in its Brady House Branch to its central servers. As a result, an official was able to send over Rs 13,000 crore on behalf of Nirav Modi and Mehul Choksi without authorisation

TNN

March 09, 2019, 08:19 IST

MUMBAI: In its biggest crackdown on errant banks across the industry, RBI has imposed a fine of Rs 71 crore on 36 banks for not upgrading their systems under the SWIFT platform.

Had they done so, the systems would have immediately updated records when funds are transferred overseas.

PNB had not linked the SWIFT messaging terminal in its Brady House Branch to its central servers. As a result, an official was able to send over Rs 13,000 crore on behalf of Nirav Modi and Mehul Choksi without authorisation.

Bank of Baroda, Catholic Syrian Bank, Citibank, Indian Bank, and Karnataka Bank have been served the highest penalty of Rs 4 crore each. Of the remaining, six lenders have been fined Rs 3 crore, eight banks Rs 2 crore and the remaining 16 banks Rs 1 crore each. Although 50 banks were inspected and 49 issued show-cause notices, the RBI decided to fine only 36 of them.

A recent Allahabad high court judgment may, however, provide some relief with the court ruling that there shall be no tax levied in case of purchases made at duty free stores at the arrival or departure terminals.